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Budget drives sweeping changes to higher education

Tonight's budget puts higher education on a path of radical change that the Federal Government anticipates will deliver the twin aspirations of financial sustainability and the world's best higher education system.

"Ongoing budget constraints and the fierce competition for public funds have seen public funding per student fall over time.

"There has been very little ability for universities to address the shortfall because the fees that universities have been able to charge have been capped. With full fee deregulation, this will no longer be the case," Ms Robinson said.

UA, however, has expressed deep disappointment that the Government contribution to course fees will fall by an average of 20 per cent and the government payment will be indexed at a lower rate based on CPI.

While the reforms pave the way for an increasingly privatised higher education system, the impact on disadvantaged students will be cushioned by scholarships that universities will be required to offer should they increase student fees.

"By resisting some of the more severe recommendations made by the National Commission of Audit in relation to the higher education loans program (HELP), the Government has sought to keep higher education affordable and accessible," Ms Robinson said.

Although students will be required to make debt repayments earlier and at a rate that reflects the cost of borrowing, the changes are far less draconian than those proposed by the Commission of Audit.

"The changes to HELP represent a considered approach in striking the balance between student and taxpayer affordability without completely paralysing the price signal needed to drive the competitive market that the Government hopes will emerge," said Ms Robinson.

In deciding to extend the demand driven system and government funding to non-university providers, UA is pleased that further work will be done to ensure competitive fairness and that the relative government support appropriately takes account of the differing community expectations and public good obligations.

Having advocated long and hard for the continuation of funding for the National Collaborative Research Infrastructure Strategy, the sector welcomes the continued funding of this critical infrastructure for a further year with ongoing investment to be the subject of a review.

UA is also pleased to see the reinstatement of a long-term commitment to the Future Fellowships scheme supporting mid-career researchers,

"These programs are critical, not only for attracting and retaining the world's best and brightest researchers, but in providing the infrastructure upon which Australia's research capability is built," said Ms Robinson.

"In the face of change, our universities have demonstrated time and again their resilience, adaptability, creativity and ingenuity in delivering on their commitment to deliver a prosperous future for the country through quality education and research.

"While challenging for many, we're confident this will continue to be the case.

"Given the magnitude and reach of the reforms announced in the Budget, there will be a great deal of detail to be worked through. UA looks forward to working closely with the Government to achieve our shared objective of creating a world's best higher education system," Ms Robinson said.

The key elements of the reform package are:

Extending the demand driven system to sub-bachelor places and non-university higher education providers thereby admitting approximately 80,000 additional students into the system (at a cost of $820 million);

Full deregulation of student fees from 1 January 2016;

Commonwealth's contribution towards course fees will be reduced by 20 per cent on average (at a saving of $1.9 billion);

All higher education programs will be indexed at a lower rate based on CPI (at a saving of $203 million);

A scholarship scheme to be funded by higher education providers directing 20 per cent of additional revenue raised by higher fees;

Ongoing funding for the Future Fellowships Scheme (at a cost of $140 million);

An additional year's funding for the National Collaborative Research Infrastructure Strategy (at a cost of $150 million);

Changes to the Higher Education Loans Program that would see the removal of the 25 per cent loan fee for undergraduate FEE-HELP, a slight drop in the HELP repayment income threshold to $50,638, and the introduction of an interest rate equivalent to the 10 year government bond rate;

The abolition of the Education Investment Fund with assets ($3.5 billion) to be rolled into the new Asset Recycling Fund;

Government funding for Research Training Scheme Doctoral Students to be reduced by 10 per cent (at a saving of $174 million); and